Transform Wood Paneling
Hang heavyweight wallpaper. It's available at most paint stores. Hang this underlying wallpaper horizontally, not vertically. You'll see the paneling grooves disappear.
Next, apply textured wallpaper that is made to be painted. You can buy this in various textures, like pebble or fresco.
Finally, after the wallpaper is completely dry, paint your walls any color you'd like!